BU Mining has no debt, and maintains a policy of holding $50 million in excess cash reserves, invested in risk-free treasury securities currently yielding 4%. If BU Mining has a 21% corporate tax rate, the cost of permanently maintaining this $50 million reserve is closest to: a.$1.2 million. b.$10.5 million. c.$30.0 million. d.$0.8 million.

BU Mining has no debt, and maintains a policy of holding $50 million in excess cash reserves, invested in risk-free treasury securities currently yielding 4%. If BU Mining has a 21% corporate tax rate, the cost of permanently maintaining this $50 million reserve is closest to: a.$1.2 million. b.$10.5 million. c.$30.0 million. d.$0.8 million.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 29P

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